Data Centres Market Insights

February 28, 2023 / By ,

Applications demand: After China and India, Southeast Asia has the most social media users in Asia Pacific

Despite emerging economic headwinds in H2 2022, demand for data centre services in Asia Pacific (AP) continues unabated. This is because downstream consumer activities such as mobile phone and social media use, video streaming, online banking, and messaging continue to grow. Enterprise activities towards digital transformation are also continuing to drive growth including cloud migration, modernisation of applications, digital collaboration and the development of new digital services.

The underlying demand driving data centre growth in AP is the applications. There are many different types of applications but a major driver in AP is social media use. The use of social media applications like Facebook, TikTok and Instagram is one driver for data centre growth. China (983 million) and India (467 million) stand out as the countries with the most social media users in terms of active users. Collectively, Southeast Asia represents the third largest user base of social media. Indonesia (191 million) and Philippines (92 million) particularly stand out as having high numbers of social media users even though their data centre markets are still emerging. Australia, Singapore and Hong Kong, despite having mature data centre markets, have a relative low share.

Regional hubs: Continued growth with large builds in mature regional hub markets

Data centre growth in a number of mature markets continues unabated. These mature metros are already acting as regional hubs due to a range of factors such as political stability, connectivity, skills availability and economic stability. In times of uncertainty, they are viewed as safe havens. Shanghai and Sydney are hub metros because of their central role in the commercial, financial and technological activity in their respective markets. Shanghai acts as a door to Eastern and Central China. In October 2022, Hong Kong-based builder and operator Chayora completed construction of its first data centre (Phase 1 of 54 MW) on its Shanghai campus. Meanwhile, Sydney acts as a hub to connect Oceania to the rest of the world. In December 2022, CDC Data Centres opened its new USD 1.054 billion data centre campus in Sydney, with plans for further expansion with an additional USD 702 million investment. In Singapore and Hong Kong, although there has been some slowing in growth, this is not due to decreased demand in the digital economy.

Emerging hubs: Emerging hubs developing across the ASEAN region and India, both challenging and supplementing existing regional hubs

During the pandemic, people’s interaction with technology significantly changed with a resulting flow-on effect to cloud consumption and data centres. Demand from the changed digital economy is driving data centres deeper into the edge. The first stage of that edge consists of national metros that also act as hubs for smaller country-based regions. In October 2022, PAG’s FLOW Digital Infrastructure and Ayala Land signed an agreement for the construction of a new data centre campus in Manila. The facility will have a total power capacity of 36MW with an initial 6MW phase (4.5MW IT load) expected to come online by the end of 2024. The joint venture broke ground for the data centre in December 2022. In October 2022, Amazon Web Services announced that they would open a cloud region in Bangkok and NextDC opened its third data centre in Melbourne. In November 2022, CDC Data Centres acquired more land in Auckland to expand its two existing campuses.

The regional hub status of Tokyo, Hong Kong, Singapore, Shanghai and Sydney remains sound. However, enterprises are starting to consider other hubs and edge markets dovetailing consumer demand from mobile devices. Jakarta and Mumbai are both receiving strong interest from cloud providers and hyperscalers. In December 2022, ST Telemedia Global Data Centres (STT GDC) completed construction work on a 19.5MW data centre, STT Jakarta 1, near Jakarta, under a joint venture with Indonesian conglomerate Triputra Group and global investment company Temasek (which owns STT GDC). In the same month, Princeton Digital Group (PDG) launched a new 48MW data centre, MU1, across two buildings in Mumbai with a total investment of USD 300 million. This data centre is set to service cloud, hyperscaler and large enterprise clients.

Edge: Smaller edge data centres emerging in satellite metros to support major national metro hubs

The edge refers to the end point where consumer and enterprise applications are run on mobile devices as well as the furthest point where applications are processed on servers and data retained on storage. The edge extends from a core global/regional hub location through to country-level, then metro-level, building or campus and finally into systems and devices. At each point in the edge architecture, there are now new infrastructure, form factors and smarter applications that use machine learning, artificial intelligence and augmented reality technologies. These are creating the new digital markets for smart buildings, smart cities and smart cars. These new activities at the edge require more processing power, data storage and network bandwidth. Hence, to accommodate this, data centres must be physically built out from core to the edge where people are.

Both operators and cloud service providers are now building their footprint out to the edge, often with new form factors such as containerised, pre-fabricated or modular designs, or business models that are based on dense connectivity. In November 2022, Digital Edge announced plans for data centre expansion in India and Thailand, and in December 2022, Leading Edge Data Centres launched a new data centre in Coffs Harbour, a coastal city in NSW Australia.

Size: Announcements of data centre or campus build sizes that are unprecedented

In the past ten years, the capacity of data centres has increased phenomenally. Ten years ago, new data centre builds were commonly less than 10MW. 5 years ago, this had increased so that builds were commonly around 50MW. Today it is not uncommon to see builds of 100MW or more. To put this into perspective, consider that in 2020, New Zealand, Indonesia and Philippines all had total national data centre capacity of less than 100MW.

In the five years between 2010 and 2015, 12 facilities were built with a total capacity of 307MW. Between 2015 and 2020, the sector built 768MW, or about 2.5 times of the earlier capacity, in only 14 facilities on industrial state land. Singapore’s capacity currently stands in excess of 1000MW. There is presently a huge gap in capacity in mature markets like Singapore, Hong Kong, Tokyo, Shanghai and Sydney, compared to most other metro markets in AP. These gaps are being bridged quickly with large new builds. For example, in October 2022, GreenSquareDC was granted planning permission for a 96MW data centre in Perth, and in November 2022, BDx Indonesia announced a new 100MW data centre campus, CGK5, in Jakarta for cloud provider and hyperscaler tenants.






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